Both True regulars know I’m working on my next book, and I occasionally test out thoughts here and on the Energy Thinks podcast to give you a preview and get your reaction. This tactic worked out so well on “The Pendulum Train” and on the Energy Thinks podcast with Senators Hickenlooper and Cassidy that I’m back again, seeking your responses.
Real Decarbonization — the working title of my new book — is about how oil and gas companies can and do translate their decarbonization aspiration into concrete action. In it, I look at everything within companies that must be assessed, prioritized, and mobilized to build a viable, credible energy transition strategy.
I’ve talked to dozens of oil and gas executives for this project — and the more conversations I have and the deeper I get into the writing, the more I realize that every single component of your company’s energy transition strategy needs to be about people. A lot of the book is about the people within the company — but in this essay, I want to explore the people outside the company and how they can, should, or will inform a company’s energy transition strategy. Not in a check-the-box, stakeholder-engagement kind of way — that would be easy but also predictable and not particularly helpful. Instead, I want to imagine how a company that is reinventing itself on a multi-decade timeline can think about all the people outside of the company who will absorb, inform, change, and be changed by the work ahead.
An energy transition strategy is permeable. Correction: An ultimately successful energy transition strategy will be permeable. (Plenty of energy transition strategies are rigid and will be out of date before the ink is dry.) By “permeable,” I mean that the strategy serves as a living wall for the cell that is the company — a flexible, stretchy, and porous membrane that allows the organism to grow and absorb information optimally. That’s because an energy transition strategy:
- Must adapt to the circumstances ahead, including technological breakthroughs, customer preferences, regulatory updates, and financial realities;
- Will be informed by the preferences of many customers and consumers, which will change frequently; and,
- Can itself influence both the circumstances and preferences ahead through its innovation, outreach, and operational performance.
Many of the CEOs and executives I interviewed for Real Decarbonization talked about the accelerating pace of disruption they and their companies are living through now and the increasing violence of those disruptions. What is less explicitly addressed is how we can create and influence those disruptions through our transition strategies.
So, how does this permeable membrane of a strategy yield opportunities for your company — opportunities to explicitly craft your interactions with a world that expects you to both transform and be transformed on your way to the energy future? Here’s how I’m seeing it play out across six fronts — fronts where your company meets the external world:
- Values and culture. Your company’s values and culture must evolve along with its energy transition strategy to acknowledge your company’s impact — positive and negative, disruptive and stabilizing, traditional and innovative — on your greater stakeholder community. When they do, your values and company culture can then authentically address ways for your stakeholder interactions to propagate good and minimize harm.
- Workforce. Your company’s workforce is also, in its own way, permeable with the broader community. You hire your teams from the broader community, and they go home from work to it, volunteer in it, spend their weekends with it, and retire back into it. Your employees represent their community to your company and represent your company to their community — and thinking about your workforce in those ways puts their participation in and buy-in to your energy transition strategy front and center. Keys to success: Having a diverse workforce and an equitable and inclusive company culture.
- Critics and partners. Unconventional engagements and alliances are becoming the norm for oil and gas companies—and they must be part of the membrane as well. Onetime critics, such as shareholder activists, are now frequently partners in shaping the compromises that keep shareholder initiatives off the proxy ballot. The expectation to engage with labor, community groups, eNGOs, think tanks, and academics will accelerate, and your company will be wise to set aside leadership time and resources to shape and participate meaningfully in engagements.
- Investors. As with ESG engagement, your energy transition strategy is both informed by and accountable to your investors and their ever-evolving expectations. Companies that regularly engage with their investors outside of quarterly calls and expected reporting find that they can positively influence these relationships while expanding their understanding of key investor drivers. Investors, after all, are crafting their own energy transition strategy — whether intentionally or reactively.
- Environmental justice. Don’t make the mistake of routinely undervaluing the opportunities and challenges of working with historically disadvantaged communities in your energy transition projects. Opportunities here include building partnerships around job creation, economic prosperity, and revitalization. The challenges include the inevitable opposition to new projects in the absence of engagement. Your company will want to articulate explicitly its EJ approach, guideposts, and engagement strategies — from macro planning to specific project implementation — throughout your energy transition strategy.
- Skillsets and training. In building your strategy, you will develop a pretty good idea of your company’s blind spots and strengths when it comes to workforce experience, characteristics, and skill sets. But here’s the opportunity: You can use your energy transition strategy to create the workforce of the future for your company. How you execute your strategy—and how you must adjust it to changing conditions — should drive how you imagine and articulate your recruiting, training, and cross-training opportunities. And how you select and grow that staff determines the health of your strategy.
This permeable energy transition strategy membrane will allow your company to adapt to the unknown unknowns ahead, be informed by the ever-changing expectations of your stakeholders, and in fact influence how the energy transition plays out. When you explicitly address the interconnected effects with key groups, your energy transition becomes the starting point for a shared journey.
Adamantine is helping companies craft their comprehensive energy transition — reach out to learn more. I want to hear your reaction to the membrane metaphor and ideas presented here: Let me know what you think. Was this Both True forwarded to you? Please subscribe here.
Thank you for co-creating with me,